Police have busted a loan-shark syndicate that allegedly charged more than 1,500 debtors interest rates of up to 4,200 per cent a year - 70 times the legal limit.

Seventeen people, including the licensee of a Wan Chai money lender and his four employees, were arrested when more than 100 police officers raided eight locations across the city in the past two days.

A former leader of the Wo Shing Wo triad society was among the 12 men and five women arrested. "He is one of the core members of the loan-shark syndicate," one police officer said.

Last night, police were still looking for other members of the gang that targeted merchants whose businesses were in trouble, unemployed people, gamblers and government workers.

Police said their investigation showed more than 1,500 debtors had borrowed money from the syndicate, with the total amount of loans being HK$23 million.

One of the debtors borrowed HK$7,000, but only pocketed HK$1,100 after deducting HK$5,900 in administration and handling charges and a guarantor's fee. He was ordered to pay HK$550 a week in 16 instalments to settle the loan.

"The annual interest rate is 4,200 per cent. It is exorbitant," Superintendent Albert Hui Kwai-sang of the New Territories South regional crime unit said. In previous cases, loan-shark gangs charged annual interest rates of up to 2,000 per cent, he said. The highest legal rate is 60 per cent.

The scam allegedly involved the licensed money lender and seven to eight consultant firms, police said. The syndicate advertised "easy and fast" loans in newspapers and posters put up in the New Territories, saying funds could be obtained without proof of income or even with a bad debt history. Applicants were called to the consultant firms in Mong Kok or Yau Ma Tei, which demanded service, administration and guarantor's fees.

"The huge charges usually amounted to 60 to 70 per cent of the loan amounts," a police investigator said. "Those wanting to withdraw applications were verbally threatened by staff who claimed they knew the victims' home addresses and details."

The victims were then taken to the licensed money lender in Wan Chai, which charged them interest at below the legal rate.

Senior Superintendent Au Chin-chau said police found the licensed money lender and consultant firms were linked. The syndicate had been under investigation for more than 12 months. The 17 suspects, aged from 21 to 52, were arrested on suspicion of lending money without a licence, lending money at an excess interest rate, criminal intimidation and criminal damage. They were being held for questioning.

This article appeared in the South China Morning Post print edition as Police arrest 17 in raids on loan shark operations

The highest legal loan rate is 60% ???
That is still considered to be a loan shark rate in economically advanced countries.
The highest loan rate should be linked to the official prime rate and be a maximum percentage above the prime.